Binance CEO Changpeng “CZ” Zhao stated that the “abnormal” trading of altcoins on the platform appears to be market behavior after the company revealed that the activity in question had nothing to do with compromised accounts or leaking API keys.
According to the boss’s latest chirping, a user deposited money into a trading account and started buying certain coins. Shortly after, others followed suit. Binance temporarily restricted withdrawals on some of the profit accounts. The move was reversed after the exchange received a number of complaints on social media from different countries.
Over the weekend, several users on Binance reported abnormal trades of certain pairs involving assets such as SUN, ARDR, OSMO, FUN and GLM. This sparked concerns that hackers may have stolen some users’ API keys via 3Commas and used those accounts to execute the trades. Binance dismissed reports of a hack or API compromise and assured that the funds are “SAFU”.
“We are aware of the concept of too much platform intervention, ‘too centralized’ attacks, etc. There is a balance between how much we should intervene. Sometimes these things happen in a free market and we have to let it play out.”
Evidence of reserve complications
In addition to security checks, Binance also struggles with trust in centralized platforms. The stock exchange last week published its proof of reserves to quell concerns over solvency, while assuring users that the money is safe. However, the rival – Kraken’s Jesse Powell – highlighted “red flags” in the revised report.
Industry experts said the report released by auditing firm Mazars failed to instill investor confidence in Binance’s financials. The report did not reveal information regarding the quality of internal controls and how the crypto exchange’s systems liquidate assets to cover margin loans.
John Reed Stark, former head of the SEC Office of Internet Enforcement, who also happens to be a vocal crypto critic, also said the revised report “does not address the effectiveness of internal financial controls” and went on to add:
“does not express an opinion or insurance conclusion and does not vouch for the figures. I worked in SEC Enforcement for [18-plus years]. This is how I define “red flag.”
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